No, manufacturing jobs won’t revive the economy

Stop claiming a factory boom will save the country and lift people up. Here's what these jobs really look like

Topics: Manufacturing, Jobs, U.S. Economy, Editor's Picks, Factory, tech, Labor, Retail, industry, Barack Obama, ,

No, manufacturing jobs won't revive the economy (Credit: Reuters/Jeff Tuttle)

In the American imagination, the phrases “the decline of the middle class” and “the loss of factory jobs” are almost inextricably linked. But the promise of a U.S. manufacturing revival has gained strength and currency in policy circles, with many arguing it’s a way to turn the economy around. President Obama has trumpeted the growth of factory jobs in speech after speech. “Think about the America within our reach,” he told his audience at last year’s State of the Union address. “An America that attracts a new generation of high-tech manufacturing and high-paying jobs!”

But, for all the optimism and nostalgia for an America that once was, it’s worth asking whether factory jobs are more likely to help workers rise to the middle class today — or leave them stranded among the working poor.

Elena Suarez was on her lunch break, taking a walk on the side of the road in the industrial park where she works, and eating a sandwich as she walked, when I stopped her to ask about her job. She’s a machine operator at Resonetics, a manufacturing company in Nashua, New Hampshire that specializes in precision laser micromachining for the medical device industry.

I asked Suarez how her job pays.

“Poor,” she said. “I pay for working.”

Suarez commutes from Manchester, about half an hour away, and gas and car maintenance eat up quite a bit of her pay. She said she got the job through a staffing agency three years ago at a pay rate of $11 an hour. After two years, she was hired as a direct employee of the company, which meant she got a handful of paid sick days and access to medical and dental plans that cost a significant chunk of workers’ paychecks. Her hourly pay also dropped to $10.50.

Her husband also works at a factory, but even with two incomes, the family has to budget carefully to get by. Suarez said she sees other families with more kids, or with only one working parent, and wonders how they manage.

“Sometimes I ask people, ‘how do you do it?’” she said. “It’s not easy sometimes.”

Overall, even as the sophistication of manufacturing jobs has grown over the past 40 years, their pay has come nowhere near keeping pace with the growth in the economy as a whole. Adjusted for inflation, the average job in the industry now pays less than it did in the mid-1970s. If there are some high-skill factory jobs, there are also plenty of low-skill ones, filled, in many cases, by a rotating cast of temps or by people whose wages never rise above the temp level.

There are arguments for paying workers better. One was made by a 2012 Brookings Institute paper that argues the future of U.S. manufacturing depends on companies’ willingness to take a “high road” approach to production. That means investing in technology, using innovative methods and ensuring that workers have the skills to contribute to process improvements.

A second argument is a more fundamental one that applies to the economy as a whole: Workers are contributing to increasingly productive companies and ought to get a fair share of what they’re making.

The $1.2 billion international plastics molder Nypro is one company that embraces the notion of high-road manufacturing. Inside the old brick walls of a former carpet mill in Massachusetts, sophisticated plastic extruding machines turn out machinery for fixing human bodies. The plant makes components for medical devices, and it requires significant sophistication from its workers. Even many floor-level production workers need to understand computers and robots and industry quality standards.

“It’s very unusual to find somebody who’s been out here for two years with less than a two-year college education level,” said company spokesman Al Cotton.

Workers come in with less education, he said, but they’re put into classes at “Nypro University” before or after their work shifts, mostly at the company’s expense, and some go as far as a master’s degree from local colleges that have affiliation agreements with the training program. Some workers handling advanced, computer-driven machines can make more than $100,000 a year, Cotton said, although that’s partly because there’s such a shortage of people who can fill these positions that they end up working 60 hours a week.

Nypro is growing. When I talked to Cotton in late May, the company was looking to fill 100 positions at the Massachusetts location.

Atrium Medical in Hudson, New Hampshire is another growing plastics company in the medical device industry, but, at least according to some of its workers, it puts less focus on investing in its employees. (Officials at the company didn’t return my calls, which was also the case with Resonetics.)

Atrium was acquired by Maquet Getinge Group of Sweden in 2011 for $680 million, and it has plans to move to a larger building soon. When I stopped by the plant on a sunny afternoon, workers were outside, eating lunch at picnic tables. I approached two women speaking with each other quietly in Spanish and asked about their jobs. They’re assemblers, they said. When I asked if the jobs are good ones, they hesitated.

“They pay the minimum,” one said. “Like $8 an hour.”

That’s the starting pay, she added. She and her friend have been working here for 10 years. How much do they make now? $9 an hour.

Another woman, eating lunch in her car, told me the assemblers move between standing and sitting. “We do everything by hand,” she said, except “the guys,” who run welding machines. “If you can’t keep up, watch it,” she said.

“We don’t get paid much, let me put it that way,” she added. “For the work we do, we don’t get paid much.”

When I approached another worker, a machine operator named Julio Abreu, he immediately told me “I love this place.”

The benefits aren’t the best, he said, but, after two years on the job, he recently got a $1 raise to $11 an hour. Since his girlfriend makes a similar wage they’re able to support their son. And he likes the schedule, working 10-hour days Monday through Thursday and getting Fridays off. When I asked him if he’d like to stay at the job, though, he laughed and said it’s good enough until he can go back to college. With a slight edge of sarcasm, he added “It’s not my dream job.”

The differences between Nypro and Atrium aren’t black and white. Ten to 15 percent of the production workers at Nypro’s Massachusetts plant are temps making as little as $10 an hour, and there are certainly some highly technical, well-paid jobs at Atrium, but the two companies begin to give a sense of how varied production jobs are.

If you want to really see how all-over-the-map manufacturing jobs can be, look no further than Craigslist. In Michigan, one of the states where the industry’s employment has been growing quickly, jobs promising $35 an hour plus benefits for running computer-operated lathes sit alongside ones like this: “We are looking for candidates with at least one year of manufacturing experience. Candidates must be able to lift 50lbs and bend, twist, and stand all day long. All candidates must be flexible in shifts and available to work overtime and weekends when required…. Compensation: $8.00/hr.”

The current moment is an interesting one for manufacturing. The industry did a spectacular nose-dive between 2006 and 2010, losing more than 2.5 million jobs and hitting a historic low of less than 11.5 million. After that, it began a slight upswing, rising to nearly 12 million. There is much debate among economists about whether that growth will continue, but advocates, including President Obama, have begun a push to help make it happen. Obama has created several pilot programs to help companies adopt high-tech manufacturing processes and to get workers trained to participate in them.

And yet, for all the talk of good jobs in an increasingly high-tech industry, as manufacturing employment has begun to grow, pay in the industry hasn’t gone up. In real terms, the median hourly wage for production workers in manufacturing—which includes front-line supervisors and programmers of computer-controlled machinery as well as hand assemblers and meatpackers—fell from $15.87 in 2010 to $15.51 in 2012, according to the Bureau of Labor Statistics. Those numbers are probably a bit high, since they don’t include temps.

On average, factory workers with little education still make a bit more than they might in retail or fast food, but that’s by no means always true. And, unlike service-sector employers, manufacturing plants are almost worshipped by American politicians. It’s hard to find a plant that expands or opens a new location without getting some sort of tax subsidy. Resonetics got a government-supported financing package when it opened its plant in Nashua, and when Atrium moves to its new location, it will be eligible for a New Hampshire state tax incentive.

Howard Wial, one of the authors of the Brookings Institute paper that advocates high-road manufacturing, said some state and local incentives do require that companies pay a certain wage, but they’re not common, and even when they exist there’s often no enforcement mechanism. In general, he said, the incentives are not particularly connected to creating good jobs.

“They’re just about poaching jobs from one place to another without creating any new value,” he said.

Wial, who is the head of the University of Illinois at Chicago’s Center for Urban Economic Development, said Obama’s efforts to encourage high tech manufacturing growth would also be stronger if they encouraged companies to pay well and supported unionization. Even without that, though, he said the federal programs are one way of helping manufacturers to be smart about their approach to technology. Right now, he said, technical sophistication varies dramatically from plant to plant.

“Some companies have thought very hard about how best to organize work and how to make the best use of workers’ skills, how to use more skilled workers, how to involve workers in making decisions that are important for improving production and innovating,” he said. “And some companies don’t really think very systematically about this at all.”

The difference, he said, means some companies are far more productive—and internationally competitive—than others. And, he said, there’s generally a correlation between the more productive companies and the pay levels of their workers.

“Certainly there are high-productivity companies where the workers don’t share in the benefits,” he said, “But, in general, to reach the highest levels of productivity, you need to have workers actively involved in solving problems, and they’re not going to be willing and able to do that if they don’t share in the benefits.”

Among the report’s findings are that manufacturing wages are on the low end in the U.S. compared with other industrialized countries, and yet the nation lost more jobs between 2000 and 2010 than higher-paying countries. The study also found that even within one narrow category of workers—automotive stampers who use stamping presses to make car parts from sheet metal—U.S. wages ranged from $10 to $17 an hour.

Aside from the conclusion that high wages go along with higher productivity, the report also notes that direct labor costs typically make up “far less than 20 percent” of a manufacturer’s total costs, making pay level a relatively unimportant factor in competitiveness.

“Overall, manufacturing is not nearly as labor-intensive as it once was, so it’s mattering less,” Wial said.

And yet, he added, that doesn’t mean companies are being particularly generous when it comes to wages.

“Over time we’ve seen this very disturbing trend of, we’ve had productivity growth and the typical worker hasn’t shared in that very much, if at all.”

Steve Sawin is one of the people who believes in a manufacturing resurgence. An old-school American businessman dressed neatly in shirt and tie and well-shined shoes, he sees high-profile companies like GE rethinking their processes and finding that it just makes more sense to make many products in the U.S. than overseas.

“Manufacturing built the middle class of this country,” he said. “We need to rebuild that manufacturing base to rebuild our middle class.”

Sawin is the CEO of Operon, a company that, he says, is not a temp agency. It provides medical device companies, including both Nypro and Atrium, not just warm bodies to run machines and assemble parts but people who’ve been chosen for their ability to work in modern manufacturing settings and then trained for the specific companies where they’ll be working.

At Nypro, Sawin and Amy Oskirko, an Operon area manager, have a workspace set up in a corner of the factory, defined by temporary partitions enclosing several large tables. There, applicants—20 to 40 of them a week for Nypro alone—take tests in reading comprehension, basic math, manual dexterity and vision. If they do well, they move on to get trained in industry standards for documentation, use of calipers and microscopes for inspecting plastic parts and how to “gown and degown”—dressing in hygienic plastic from hair net to shoe coverings to keep the products clean. The entire process takes 6 ½ to 8 ½ hours over two days—unpaid—depending on the client company’s training needs, Oskirko said.

Sawin said his company offers services that help U.S. companies compete. With employees that work for Operon, they can easily add or subtract workers based on their needs at any given moment, and they can hire the ones that work out best as permanent employees. His company helps take the guesswork out of labor, the most variable component in any production process.

“You go out and buy a bag of screws, you’re confident they’re all going to work with very little exceptions,” he said. “People on the other hand… they are all over the map.”

For the most part, Sawin said, the positions he’s filling aren’t complex, thanks partly to the automation of production functions.

“It has relegated the human role in many cases to inspecting, monitoring and controlling machines, packaging, labeling and maybe a little assembly,” he said.

Along with all the other training topics, new recruits watch a DVD labeled “work ethic.” Sawin said it’s something you can’t really teach, but they try because it’s a big issue among the people they hire—the biggest reason they don’t get hired on full-time.

“For some reason a lot of young people have not been indoctrinated in the basic tenet of the good work ethic,” he said.

Sawin said the pay rate for the people he hires is between $9 and $12 an hour. Operon doesn’t offer health insurance—the plans it wanted to provide didn’t meet state-mandated minimums in Massachusetts or New Hampshire.

Even if the pay were only $8, a level that’s not uncommon for temps in the industry, Sawin said that’s not bad considering that the work is entry level.

“This guy could have been bagging groceries at Stop & Shop last week,” he said.

I asked Sawin if people might work harder if they were paid more, but they said he doesn’t think so.

“I don’t think it has to do with pay as much as it does with principles,” he said.

If there’s debate over whether paying production workers more increases productivity, there is also that other argument to consider.  How much does a worker contribute to a company’s success, and what kind of compensation does she deserve for her work? Companies are quite unlikely to pose this question to themselves. Raising it has, historically, been the job of the labor movement.

But few workers in manufacturing today are represented by unions—13.4 percent of production workers in 2012, down from 19.2 percent as recently as 2002.

“It’s become almost impossible to form a union through the National Labor Relations Act procedures nowadays,” said Brad Markell, executive director of the AFL-CIO Industrial Union Council.

When it comes to a real resurgence in manufacturing, Markell is skeptical that there will be much progress unless the U.S. revises its trade policies, but he said there’s no inherent reason why the production jobs that do exist in the country now don’t pay better than they do.

“The value added per employee in those areas is enough to support a well-paying job, but the question is whether the workers have the power to extract the pay from those companies,” he said. “In an era of high unemployment, and when we’ve lost a lot of manufacturing jobs, and when people aren’t joined together in a union it’s very hard.”

Markell said it’s also not clear that more complicated products and processes in manufacturing lead to jobs that demand better training, or command better pay.

“The average 17-year-old is extremely sophisticated on computers, so how much education does it take?” he said. “It’s certainly not the case that because jobs involve computers that they pay better. It’s more about the power dynamic.”

Resonetics, the laser micromachining company where Elena Suarez works, is a high-tech manufacturer by almost any measure. Its machines can features as small as a thousandth of a millimeter, and it does this for the medical device industry, a sector that is obsessively interested in new technology. But when I asked Suarez if the job took much training she shrugged and said, well, you have to learn to use the machines.

One of Suarez’s coworkers, who asked me to refer to her only as Judy, said running the machines isn’t particularly hard. “If anything it’s more boring than demanding,” she said.

Judy, a woman with a look and manner that suggest an office manager more than a machine operator, has been in manufacturing for 30 years. She spent most of that time at a company that makes electronic testing equipment. She trained there as a computer programmer and went back to school for blueprint reading. Over time she brought her pay up to $20 an hour. But when that company closed the local plant, she found her skills didn’t translate. When she was hired at Resonetics four years ago, her experience won her a starting wage of $12.50 an hour. Soon she learned new skills, including inspection, which means staring into a microscope looking for flaws in the plastic products the machines produce—it’s harder on the shoulders and neck than on the eyes, she told me. Today her pay is up to $15 an hour.

She’s able to live on that, she said, partly because she paid off her mortgage over her years at the higher paying job. It also helps that she’s getting a pension from that job.

Judy said management seems to have improved at Resonetics since she started there, but in general she thinks the industry is tougher for workers than it once was.

“I think years ago loyalty played a role in it,” she said. “That’s not the case anymore. It’s all about the money. The bottom line for the people who own the business is ‘how can I make the most money by expending the least money?’”

Livia Gershon is a freelance writer living in Nashua, New Hampshire.

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